Amazon Marches Toward $100 Billion in Revenue

At $100 billion in sales, Amazon would eclipse both Target Corp. (NYSE: TGT), the second largest retailer in America, and Costco Wholesale Corp. (NASDAQ: COST) in revenue. Each of the two has the disadvantage of operating hundreds of physical stores, and the expenses that go with them. These traditional retailers, and others such as Best Buy Co. Inc. (NYSE: BBY) and Sears Holdings Corp. (NASDAQ: SHLD), cannot “open” new departments quickly or launch products in an instant. None could have put the Kindle into circulation, or given it front page billing on Amazon’s home page, which pushed sales quickly to over a million. The rapid pace at which it created the ubiquity of the e-reader and its follow-on tablet are beyond the capacity of even retail industry behemoth Wal-Mart Stores Inc. (NYSE: WMT). The same holds true for Amazon’s Prime instant video product, which rapidly became a direct competitor to both Netflix Inc. (NASDAQ: NFLX) and Apple Inc. (NASDAQ: AAPL).

The single most important case for how much more rapidly Amazon can change its business model compared to traditional retailers is its Amazon Web Services, a business that has allowed it to become the storage and application backbone of thousands of companies, some of which are among the largest in the world. The cloud-based product could never be challenged by bricks-and-mortar operations

Some of Amazon’s advantages as a company are not readily visible to the people who use it to shop. And that tells a great deal about the success of the company. It is an iceberg, much of which sits beneath the simple e-commerce business and has allowed the company to quickly become one of the largest American firms.